Do you want a Capitalist Run Health Service?

The NHS has been discussed in this election in terms of chronic underfunding, but not much in terms of its continuing privatisation. National Health Action, one of the smaller parties, has raised the issue and aims to repeal the 2012 Health and Social Care Bill. It sees the scale of the problem. Labour aim to do something similar, but the issue of the emergence of a capitalist health service deserves more thought from all voters. It is key. The process will soon be irreversible. Capitalism puts those who are selfish in control. For decades the NHS has been marked by service, care and concern for patients. Soon it will be a question of what profit can be made out of patients and sickness. Voters need to think what they are losing. This short paper provides some background and warnings.

Capitalist Privatisation of the NHS.

You are aware that the NHS is being privatised. Nurses are being provided by agencies. Operation systems are set up by private companies. Hospital trusts can and do undertake commercial activities on a large scale. Hinchingbrooke Trust Hospital was taken over by a private company, Circle, in 2012. Private patient care is mixed up in the working of Hospital Trusts. GP Surgeries are being run by private companies; one has 3 million patients in its network. The Private Finance Initiative has been building hospitals through financial corsortia, and vast pharmaceutical companies put acute pressure on the NHS and NICE to use its products. It is difficult, deliberately so, to work out the proportion of the NHS which is now funding private and corporate agencies, but it is approaching 10% on the most limited calculation, and if PFI and other elements are included it could be twice that. Given the weight of ordinary staff wages, that is very high.

Structural Privatisation.

But the situation is worse than this. The structure of the NHS was changed drastically by the 2012 Health and Social Care Act. (Notice the Conservatives had an opportunity to address Care in this Act, but did not.) This Act created a capitalist structure to the NHS which embeds and encourages a private enterprise NHS. Contracts have to be put out to private tender and Foundation Trusts are expected to act like large private companies. There are all kinds of ways in which capitalism is embedded. The NHS logo, for example, covers a lot of private companies acting commercially. There is a company, NHS Property Services, which has shares and a commercial structure to handle NHS property. There are Commissioning Support Units which have a list of “preferred providers” dominated by private multinational companies. In the Budget of March 2017 the Chancellor Phillip Hammond provided £325 million for Sustainability and Transformation Plans, another privatisation move. There are now enough highly paid posts, with executives are in favour of the system that pays them, for privatisation to roll on.

So What?

So the structure for full privatisation is in place and quasi- privatisation has already occurred. But so what? Many people are not worried as long as they get NHS services free at the point of delivery. It is like receiving a free ice cream – Why worry who provided it? But here we must do a little analysis.

Waste and Inefficiency.

First, we look at the waste of money. One example was the contract to put out to CSC and BT to computerize all NHS records. It started in 2011, cost £10.1bn, was axed in 2011 without any records being delivered. Only a few hundred million were recovered from the companies concerned, a vast loss to the NHS. The cost of hospital PFI is similar. The contracts meant that repayments were three to seven times the physical cost of building the hospitals and repayments of £10bn a year are being paid (Guardian estimate) this fiscal year when, with QE, the Bank of England borrows at an almost zero rate. We hear the vast cost of agency nurses, drugs, private contracts and many other NHS contracts emerging month by month.

Quasi-Monopoly Private Control – Why it costs a lot more.

But the examples are merely that, examples. Far more important is the economic weakness in these privatisation contracts. Contracts are put out to competitive tender, but what does this mean? Say a cleaning contract is awarded for several hospitals. Employees, expertise, equipment is gathered by the company concerned and it does the job, well or badly (and remember G4S, that flawed company, “provides services to around 200 hospitals and healthcare centres in the UK alone”). Once these contracts are in place, the firms have an effective monopoly, because the cost of matching a contract in that area is beyond most other bidders. It is wrong to call it an internal-market system within the NHS, because monopolies are not markets; they kill competitors. It is an oligopoly, a club for favoured contractors. These are state favoured corporations. More than this, because if any one of these services stopped, a hospital or service would be in crisis, these firms have a power akin to the old union strike power. Usually, there is not any available way to withdraw from a contract when there is failure. No-one is going to rock the boat.

Firms have an interest in colluding in these kinds of markets. I’ll bid high on this contract if you bid high on that. Further still, bribery is also likely. If doctors have been bribed to prescribe certain drugs through receiving favours, how much more likely are bribes when billion pound contracts are involved. When a commissioning executive moves to one of the companies he has previously given big contracts to, that is bribery in my book, a reward for services given. So these monopolies can, and do, milk the system. Meanwhile the NHS employs 25,000 people to commission and administer these contracts, when they could be directly running the services concerned.

The other key point is that the costs for private companies are costs plus profits, while the direct running of the tasks would involve no profits. Since profits may be 10-20% of operating costs, this pushes up the NHS budget by billions.

But there is another structural problem with these privatisation moves. If the NHS is operating under a tight Budget, as it is, partly because of the privatisation which has already occurred, then private firms are in a stronger position to come in and pick up contracts. So the private companies benefit when the NHS is underfunded. Far from being efficient, this all reeks of waste on a large scale.

Andrew Lansley, the 2012 Health and Social Care Act and Care UK.

My interest is in the strange career of Andrew Lansley, my MP. Just before the 2010 Election the wife of John Nash, founder and then Chairman of Care UK was reported to have donated £21,000 to the private office of Andrew Lansley, then the Shadow Secretary of Health. Aside the issue of whether John Nash and his wife spoke to one another about donations, the £21,000 was effectively a bribe to Lansley, who anyway was planned to change the NHS. However, in the election Lansley said repeatedly that there was to be no “top-down” reorganisation of the NHS. Immediately after it, he opened the door to privatisation and within two months a white paper, undiscussed in the election or manifesto, was published. The Health and Social Care Act was being formulated. I was incensed at the donation. It was immoral, even if it could not be nailed as such. But my moral indignation was partly wrongly directed. Lansley became Secretary of State for Health, gave the green light to Care UK and other private companies who had effectively written the 2012 Health and Social Care Act for themselves and private health care was set to explode. Care UK has NHS Budgets of around £350 million a year. That makes £21,000 look small. Lansley proved an ineffective Secretary of State and has disappeared from politics. Care UK committed a number of gross failures in their contracts, operated off-shore to avoid taxes and were then partly taken over by a bigger capitalist, but is a big NHS private provider. Branson and othe capitalists with no Health expertise are looking to move in on these lucrative contracts..

Continued privatisation.

The privatisation continues. Jeremy Hunt, the present Health Secretary, has declared himself in favour of NHS privatisation. The question is merely when and how fast. Service is gradually being crushed under the capitalist commitment to selfish profit. Of course, within these organisations there are many who serve, care and work hard. There are many more who work hard on low pay so that the owners can reap their profits. Many contracts allow space for profits. A £1.2 bn contract in Staffordshire may well reap a minimum of £100mn “fees” which could have gone to the NHS.

This election.

If the Conservatives are returned this election, this privatisation with its waste, falling levels of care, entrenchment of selfishness, inefficiency and escalating costs will continue. We should be grateful to the National Health Action Party for the stand they have taken, and for the Labour Party’s commitments, and see how dangerous the situation is to Health Care. Underfunding is partly a problem, but it has also been partly caused by the privatisation and profiteering that has already occurred. We should be warned.